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I called them to verify that was the max payout for that tire. They have a database based on SKU numbers for the tires and wholesale costs. The max payout for my size was in fact $179.99. Oh well.
They are supposed to replace the tire up to a certain amount, not use their formula for replacement cost which didn't cover up to the limit they set for replacement.
As such, you're incurring more cost that the plan suggests. More bad press for bmw's roadside assistance/tire replacement program